Marketers are moving past offering nonfungible tokens as branded collectibles and instead trying to make their NFTs practically useful for consumers.
NFT projects that give people a sense of community, access to a physical experience or rewards are now the most promising for brands, industry executives said.
“It should be about the value it gives you managing in your everyday life,” said AJ Dalal, for data and Web3 at digital consulting firm Publicis Sapient.
While plenty of consumers are still speculating on NFT collectibles for financial gain, the NFT industry is being forced to evolve, said Geoff Renaud, chief marketing officer and co-founder of Invisible North, a marketing agency that helped create the on-site experience for an NFT project this year at the Coachella Valley Music and Arts Festival.
Coachella sold three sets of NFTs as the festival returned in person this April after a two-year hiatus because of the pandemic. One set sold at auction comprised 10 NFTs conferring lifetime passes to the annual event. Buyers of a second set of 1,000 NFTs, priced at $180, were eligible to receive a photo book not available to others.
All ticketholders were eligible to claim a free NFT that could be used for extras such as expedited entry. And a selection of the free NFTs gave pass holders further benefits such as a free ride on the festival Ferris wheel or weekend passes for next year’s event.
More than 63,000 of the 250,000 total ticket buyers claimed their free NFTs, and more than 13,000 benefits and experiences were redeemed above and beyond the speedier entry, said Sam Schoonover, head of innovation at Coachella.
Organizers see digital technology as a way to upgrade the Coachella experience, Mr. Schoonover said, adding that they plan to bring NFTs back for next year’s event.
Coachella attendee Chad Dominic Sahilan said the benefit of the NFT that came with his ticket, a free Ferris wheel ride, loomed larger for him than anything about the blockchain or digital collectibles.
“I was more so intrigued by the utility of the NFT—the perks of it—rather than like the actual NFT crypto side,” said Mr. Sahil.
The marketing industry initially seized on the rise of NFTs to pepper consumers with tokens attached to digital renditions of Budweiser cans, Macy’s Thanksgiving Day Parade balloons and McDonald’s McRib sandwiches.
The efforts capitalized on the broader interest in NFTs as investments, as exemplified by the $69.3 million sale of a digital image by the artist Beeple in 2021 and the $2.5 million winning bid this month for a bottle of champagne that came with five NFTs.
Still, the tokens’ novelty has waned over time. And as the cryptocurrency market fell this year, so has the desire to purchase and own NFTs, which are often bought and traded with cryptocurrencies.
Now, other marketers are trying twists similar to Coachella’s to make their NFTs more rewarding for owners.
The Australian Open plans on bringing back its NFT project for next year as well, after selling out 6,776 of its AO Art Ball.NFT tokens in January that were priced in the Ethereum cryptocurrency.
The NFTs included digital images of a tennis ball and were each associated with a unique spot on the tennis court. Eleven of the winning championship points from the tournament gave holders of the associated NFT the right to receive the actual tennis ball from that match.
Run It Wild, the development studio that created the Australian Open NFT experience, is exploring how the ability to buy and sell NFTs can add further value for consumers, according to Adam De Cata, the studio’s founder.
“The best part about it is that if you’re just not interested in that brand or that product or that store anymore, that you can just sell it if there’s enough demand…for someone else to experience that same amount of value moving forward, he said.
Water brand Liquid Death in March sold 6,666 NFTs under the name Murder Head Death Club and priced in Ethereum worth about $225 each at the time. They bestowed owners with benefits such as conversations with executives on Discord, a chat platform, and member meetups.
Liquid Death, which is owned by Supplying Demand Inc., is positioning its NFT program as an “ultra premium kind of VIP club,” said Dan Murphy, senior vice president of marketing at Liquid Death and one of the architects of Murder Head Death Club .
Brands that create NFTs need to make a commitment to engage with people who are interested, Mr. Murphy added.
“You can’t advertise on Facebook and connect with these people; you have to really do boots on the ground work to get involved,” he said.
That may mean showing up in Twitter Spaces conversations, at NFT conferences or creating a Discord server for NFT holders to interact with each other and the brand, Mr. Murphy said.
Tokens offered consumers a sense of community and ownership even before brands began trying to add tangible benefits, said Mr. Renaud of Invisible North.
That is the opportunity that brands can build on, he suggested.
“Not everything needs to be this massive risk [and] investment for your average consumer,” Mr. Renaud said. “You can actually reward people and come up with incentives for them to engage.”
Write to Ann-Marie Alcántara at [email protected]
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